Clarification is often best if you are going to understand forex live. You can read statements that are innately confusing and lead to losses when you trade. It is another reason that many find forex too complicated to even consider trading. In an effort to take away all of the confusion this second part of the rate discussion will look at two statements. The first statement is the bid is the best price you sell to the market. The second is the ask price is the best price you buy from the market.
Going Back to Forex Live Long and Short Concepts
· Going long means you are buying the base currency, while you sell the quote currency.
· Going short is where you sell the base currency and buy the quote currency.
Keep these two statements in mind as the following is worked out to help you understand forex live rates. Also keep the next concepts in mind:
· The bid is the price brokers buy the base currency at in exchange for the cross currency.
· The ask price is what brokers sell base currencies at during the exchange for the cross currency.
Now, the broker has to be able to buy the base currency from you to place the transaction since this is how the forex market is designed to work. The broker has to be willing to make a transaction with you and if you are going to sell something they need to buy it. If you are going to buy something then the broker will need to sell it. Consider for a moment a non forex live example:
You go into a store and purchase soda. You get six cans. You can now be a broker to your friends, since you bought the sodas for $1.20, but you want a profit. You sell each soda for $1.25 getting .05 cents in profit. Now think about the soda as currency. You have a currency someone wants, you set a price, and you sell that currency to the buyer. If you look at it that way it makes sense for that these two statements are also true:
· The bid is the price you sell to the market.
· The ask price is the price you buy from the market.
Forex Live Another Way
Remember above we said going short means you have a higher price to start with? This is because in forex live you want the base currency to decrease in rate. A decreased rate means profit for you because the decreased rate means the value went in favour of the quote currency. If 1 is the base and a currency is at 1.50 then goes to 1.25 it means you now use 1.25 to get 1 base instead of 1.50 (which is more) to get 1 base.
If you go long the currency rate is lower because you want to buy the base on the assumption it will increase in value. If you can remember this for forex live you won’t need to remember the bid or ask, but can make the choice to buy or sell